In the filing, Twitter said the plan would “protect stockholders from coercive or otherwise unfair takeover tactics.” The poison pill, if triggered, gives shareholders much more voting power while severely diluting Musk’s shares.

Musk outlined his financing plan in an April 21 SEC filing, but that simply gives Musk more leverage in negotiating with the board or other investors—it won’t help him with the poison pill.

Will the poison pill stop Elon Musk?

The poison pill plan is a serious deterrent against a hostile takeover, says Adam Pritchard, a corporate and securities law professor at the University of Michigan Law School. Not only would the $2.64 billion Musk already spent be squandered by the move, Musk would have to spend many billions more than the $43 billion he already proposed spending.

“It’s economic suicide,” he said in an interview. “No one has ever triggered a poison pill. They’ve been around since the 1980s. No one has ever triggered one.”

While Twitter has not yet formally rejected Musk’s bid, the company’s board is expected to do so in the coming days.

The board now has a few options, Pritchard says: The board can do nothing, it can seek a more favorable buyer, or it can negotiate for a higher price.

Musk can overcome the poison pill through a proxy contest, he adds. Musk would need to issue a proxy solicitation and receive 51% of the shareholder votes (mostly by winning over institutional investors). From there, Musk could replace the current board, which includes co-founder Jack Dorsey, with people favorable to his takeover plan.

“A poison pill is not invulnerable,” Pritchard says, “but it requires you to go through this lengthier process of soliciting proxies in order to displace it.”

This article was updated to include details about Musk’s financing plan. 

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